December 08, 2008

An Open Letter To The Web Analytics Community

Dear Web Analytics Experts:

I have a soft spot in my heart for you, given that your skills are more technical than the average marketer, more practical than the average IT staffer, and more focused than the typical database marketer / SAS programmer.

But I need your help.

My clients are looking for a thorough, comprehensive analysis of customer behavior. And they don't always feel like web analytics provides this view of customer behavior for them. Since the vast majority of my clients don't have a SAS programmer to help integrate data like the big companies have, they heavily depend upon the web analytics expert for support. These folks need you to give them accurate answers. They don't feel like they are getting accurate answers.

Let me give you an example.

One client felt that shopping cart abandonment was a major problem. The VCBs (vendors / consultants / bloggers) suggested that their business would dramatically improve if they made key changes to the website. With a 3% conversion rate and a 40% shopping cart abandonment rate as measured by the web analytics expert, the VCBs appeared to have a case.

When the SAS programmer combined site visits over the course of a month, a very different story appeared. It turns out that the same customer visited the website multiple times per month. The monthly conversion rate was actually twenty percent (20%), not the 3% rate with 40% abandonment that the VCBs clobbered leadership about.

This doesn't mean that there isn't improvement that can be offered by the VCBs, because they certainly can help.

What this does mean is that the web analytics expert failed to provide a realistic view of customer behavior. The web analytics expert used the software given to her, and the database structure offered by the web analytics vendor, to do the best job she could do.

In order for the web analytics community to move from a valued team member to a trusted advisor, change has to happen in the industry.

Web Analytics vendors can better integrate with offline systems, providing better data integration across channels. The big web analytics vendors are already doing this --- one major web analytics vendor called me numerous times, picked my brain for data integration ideas, then launched a product without attribution or payment. I won't make that mistake again.

Your company may not want to pay one of the big web analytics vendors to integrate data. This puts the responsibility on your shoulders. You will have to work to integrate data, either partnering with your SAS/SPSS expert, our BI expert, or a savvy IT staffer willing to help.

You will have to provide a vision for where this goes. This means you will transform yourself from being the person who tells a merchant that customers had a 4.7% conversion rate on her landing page to being the person who makes a business case for a $500,000 data integration project. You will have to become good at calculating profit. You will have to become good at convincing management why your vision is important --- how will the executive benefit from your vision?

You will have to become political. Yup, this sounds hokey. Being political does not mean you're going to suck up to executives, driving their children to daycare. Being political means that you'll get to know your executives. You'll learn what they need. And then you will craft a story that blends their challenges with your vision, providing a compelling narrative that the executive takes on as her own vision.

Part of this learning process will include understanding all channels. I repeatedly run into bright web analytics individuals who have not been given the opportunity to integrate with other staffers in the company. The web analytics expert in 2009 will actively learn about all channels, and will get to know people who are "not like us". And the web analytics expert will take this responsibility upon herself, not waiting for her boss to provide the experience for her.

You will create your own data marts. The SAS/SPSS experts have been doing this for decades. If something doesn't exist, the SAS/SPSS experts "make it happen". They get no credit for this, and they get blasted by the IT people when it all has to be integrated together, but they come up with answers. You need to inherit this process. Think what you could do if you created your own data mart of social media activity across your customer base?

You will stop doing what Google tells you to do. Many companies cannot afford tools from the big vendors, so they work with Google Analytics. An entire generation of web analytics experts are being trained by Google to analyze business exactly the way Google wants your business to be analyzed. You will migrate beyond Google in the upcoming year. You will start looking at your business the way your CEO or CMO wants to look at the business.

To quote a former Presidential candidate, "my friends", you have a huge opportunity in front of you in 2009. I strongly believe that ownership of customer understanding is yours for the taking. The BI folks, who aren't as good as the SAS/SPSS or Web Analytics folks at analyzing data (but are really good at organizing data), are actively working to integrate corporate data for you. Once they accomplish this, they will take ownership of your area of responsibility.

I think you are ready to take ownership of corporate analytics. Always remember that the secret to your success is not in the area of KPIs or measurement. Your success is tied into your ability to link together all data within the company, to be able to tell a compelling story, and to be able to have executives trust you enough to make key business decisions based on your recommendations.

13 comments:

Excellent article Kevin, and I must admit I agree on all points. I think one of the issue, just like in the early days of the web, is anyone and his dog becomes an expert at web analytics because they recently stumbled on Google Analytics. Web analytics has a good buzz, it's in high demand, and is quite young... so there are mistakes and managers who see the web as a silo, who poor money into marketing without optimizing the processes, who think in terms of visits instead of being customer centric, or think anyone in the office can be their web analytics guru...

Especially in these times of economic trouble, those who get it right will survive and become stronger... Does who don't... well...

I've been thinking a lot lately about the exact same issues and was surprised at how similar our thoughts are. And Stephane hits the nail on the head when he describes the changes the web analytics consulting market is seeing recently ... interesting times to be sure.

The bottom line is a tool like Google Analytics or Webtrends or Omniture is not the be all, end all (it can never be). You need data analysts and preferably data miners / modelers. Automated tools makes people think they don't need to understand statistics, programming and web site technology and from my experience, lulls them into a false sense of skill and knowledge.

Maybe, Eric, the thoughts are similar because this truly is what needs to be done! I barely, barely remember Ron's post and your follow-up ... that seems like it was 14 blog-years ago!

Jacques, web analytics folks are ready to run the show! Business issues in other channels are very similar to the online channel, though the data is sometimes harder to obtain, and requires different software to analyze. There's no reason why a Web Analyst can't do this.

And Anonymous, I think you're right, there are complementary skills (programming, statistics, ad-hoc analysis) that truly set an analyst apart from the software that the analyst uses.

One thing I would take issue with, though. You write: "I think you are ready to take ownership of corporate analytics."

This may be true in some companies, but I'll tell you this: I work with a lot of financial services firms and I can't think of a single one where the Web analytics folks are anywhere close to being able to take ownership of corporate analytics.

Why? You alluded to it yourself when you said "your success is tied into your ability to link together all data within the company."

In most financial services firms (and I would bet in a lot of firms across other industries), Web analytics groups don't have the ability to link the data. And (this won't win me any new friends in the WA community) they have no interest to -- they're happy to play with their Web data.

I suppose the difference is that financial services businesses are, by and large, big ... while my industry is, by and large, small.

Outside of Lands' End / Nordstrom ... the vast majority of businesses I work with are $50,000,000 in annual sales, with 1-3 analytics individuals in total. The Web Analytics person is ready to go in those instances.

Great post, Kevin. At its root, the problem isn't with Analytics it's with the difference between numbers and information.

KPIs usually aren't indicators of anything by themselves. Eg: If conversion rate sags, is that bad? Not if you've brought in a bunch of incremental traffic that's lower in quality than average, but also comes in at low cost!

AOV drops, is that bad? Not if it's because you're selling additional units of low ticket, but high margin products...

The dashboards are useful starting points for analysis, but all too often staring at the dashboard becomes a proxy for more substantive analysis that would produce actionable information.

The first speaker, Gary Angel, is presenting behavioral segmentation using web analytics data. The segments that he presents did not and could not come from web analytics solutions directly, as Gary emphasizes. After the webinar he explained that data mining tools were used by his team to generate the customer segments that he identified.

In this scenario, the web analytics solution's job is to supply data at the session level into the mining process.

All commercial web analytics solutions have a way of exporting data. I work for Unica and am especially fond of the way that this works with Unica's solution. Namely, an open web analytics data mart is built into the solution and enables free access for mining any detail of data, feeding it into BI or marketing automation uses.

Kevin. Thanks for putting it on the line. Even using tools like SAS and SPSS, often it's hard enough to come away from a problem with a valid concrete conclusion. Not enough data, improperly measured data, misinterpreting the problem, and simple random error can all make data life miserable. Some of the tools to which you allude take a very simplistic view of the data, and violate or ignore basic statistical assumptions. I think that some of these analytical definitely have their place in the BI world, and we are without a doubt embracing them .. but I cringe to think that important decisions are made purely based upon them. At least let's use them in conjunction with other tools to valid some of the conclusions.

As someone who has worked 10 years at Epsilon in direct marketing analytics and 1 year (currently) for a social media company out of Boulder, your post has tapped a concept I have struggled with mightily. Most of the comments center (correctly) on the integration of web analytics with traditional but you mention a social media mart that could also be integrated.

I'd like to point out that:a) there are social media data feeds available that contain things like product- (or brand-)specific sentiment, activity levels, and themes emerging from online conversations andb) if you thought integrating web and traditional was hard, try being the guy to bring up the idea of weaving social media analytics into the picture! That's me currently.

Anyway, lovely post and, as part of the community trying to figure it all out, I look forward to updates in the future.

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Kevin Hillstrom, President, MineThatData

Kevin is President of MineThatData, a consultancy that helps CEOs understand the complex relationship between Customers, Advertising, Products, Brands, and Channels. Kevin supports a diverse set of clients, including internet startups, thirty million dollar catalog merchants, international brands, and billion dollar multichannel retailers. Kevin is frequently quoted in the mainstream media, including the New York Times, Boston Globe, and Forbes Magazine.

Prior to founding MineThatData, Kevin held various roles at leading multichannel brands, including Vice President of Database Marketing at Nordstrom, Director of Circulation at Eddie Bauer, and Manager of Analytical Services at Lands' End.

You may contact kevin at kevinh@minethatdata.com.

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